Australia's Leading Ophthalmic Magazine Since 1975

Australia's Leading Ophthalmic Magazine Since 1975

Save Sight Institute in costly legal battle

07/05/2018

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The University of Sydney (USyd) will be hoping a long-running legal battle involving the Save Sight Institute (SSI) will reach its conclusion soon, after final submissions for the case were presented in Federal Court last month.

The dispute, which has cost USyd millions of dollars in legal fees, has been ongoing since 2013 and is related to a licensing deal the university entered into in 1999 with a private company to commercialise its Accumap technology – a glaucoma testing device – developed by SSI researchers. USyd has accused its partner in the deal, ObjectiVision, of breaching multiple aspects of the licensing agreement, while ObjectiVision itself has lodged a counterclaim against the university over the supposed theft and misuse of intellectual property (IP).

According to The Australian Financial Review, lawyers for USyd told the court recently that the deal had fallen apart by 2008 after ObjectiVision missed multiple licensing fee payments. ObjectiVision’s founder, Mr Arthur Cheng, had also instigated a rights issue around that time which diluted the university’s stake in the enterprise from 20% to 0.73%, prompting USyd’s representatives to resign from the board.

Relations between Cheng and the technology’s inventors – Associate Professor Alexander Klistorner and Professor Stuart Graham – had reportedly deteriorated to such an extent that USyd revoked the exclusivity clause in the licensing agreement and established a new enterprise to further commercialise the technology. That company, Visionsearch, is at the centre of ObjectiVision’s counterclaim, which accuses USyd of breaching intellectual property law by infringing on its copyright and misusing confidential information.

Technical issues

The trouble for the doomed enterprise began around 2007, when technical problems were identified prompting recalls, and ObjectiVision struggled to bring an updated version to market. SSI members were also concerned the company was trading while insolvent and, according to USyd counsel Mr Matthew Darke, by 2008 the relationship between the two parties had “broken down”.

USyd counsel said the deal was completely terminated by USyd in 2011, after it discovered Cheng had arranged new funding from a third party, a move it said was in breach of the licensing agreement. It has argued the terms of the deal meant ObjectiVision needed its consent before securing the third-party funding, while it also allegedly stipulated that the funder needed to possess the resources to commercialise Accumap 2.0.

However, ObjectiVision has disputed this and said the agreement in fact required the university to agree to any third-party funding, regardless of whether the funder had the means to commercialise the technology, unless it had other “reasonable grounds” to refuse.

According to AFR, Darke responded to this claim by describing ObjectiVision’s construction of the clause as “commercial nonsense” and said that the lack of consent regarding initial funding should be grounds enough to have the agreement torn up.

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Counter claim

Since 2010, SSI has been attempting to repurpose the Accumap technology, which measures electronic signals travelling from the retina to the brain’s visual cortex, into a system for detecting optic neuritis, a precursor to multiple sclerosis. To achieve this, USyd established Visionsearch and commissioned many of the same researchers involved with the development of Accumap to work on the new venture.

Dr Christopher Peterson – who had joined SSI in 2009 to manage its relationship with ObjectiVision and Cheng – founded Visionsearch in 2010 while Klistorner, whose research had driven the creation of Accumap, became an advisor. Additionally, the device’s programmer, Mr Vadim Alkhimov, became the company’s lead programmer after taking redundancy from ObjectiVision in early 2008.

This cross-pollination, combined with similarities in the two devices’ software code, has led ObjectiVision to accuse USyd and Visionsearch of IP theft. Some lines of identical code were found in a comparison of the two softwares, which was made after ObjectiVision won the right to preliminary discovery of Visionsearch’s source code in 2014.

One of the Visionsearch’s directors, Mr Paul Peterson, denied that the new company had stolen any of the former code when writing the new software, however he did concede that it “did not look good.”

Despite this, Peterson testified that Alkhimov must have transcribed that code from a notebook as part of a genuine attempt to “start from scratch” when developing the new software – the first version of which had 30,000 lines of code.

“We all knew the risks [of being accused of copyright infringement] given the history in this situation, so I’d be very surprised that he would deliberately copy and paste a couple of lines and put at risk all the work we’d done,” Peterson said.

Visionsearch’s new device has already received regulatory approval in Europe, the US and Australia, but the legal cloud hanging over it has slowed sales. This situation could continue to linger despite the fact that final submissions related to the licensing agreement were heard last month, as there was not enough time for the court to also hear final submissions related to the counterclaim.

As such, it appears USyd won’t see a return on the more than $2 million it has already poured into the case for at least a few more months.